Alluvial Capital Management, an investment management firm, published its second-quarter 2022 investor letter – a copy of which can be downloaded here. Alluvial Fund declined 9.9% in the second quarter and is down 16.5% year-to-date. By contrast, the Russell Microcap Index lost 19.0% this quarter and has fallen 25.1% in 2022. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.
In its Q2 2022 investor letter, Alluvial Capital Management mentioned Garrett Motion Inc. (NYSE:GTX) and explained its insights for the company. Founded in 2018, Garrett Motion Inc. (NYSE:GTX) is a Switzerland-based automotive company with a $427.0 million market capitalization. Garrett Motion Inc. (NYSE:GTX) delivered a -17.93% return since the beginning of the year, while its 12-month returns are down by -7.31%. The stock closed at $6.59 per share on July 27, 2022.
Here is what Alluvial Capital Management has to say about Garrett Motion Inc. (NYSE:GTX) in its Q2 2022 investor letter:
“Garrett Motion is an exercise in patience. Just as it seemed the global automotive market was about to recover to pre-COVID production, along came Russia, inflation, and the threat of recession. Still, the company is making great strides in improving and simplifying its balance sheet. In June, the company redeemed the rest of the Series B preferred shares it issued to Honeywell when it exited bankruptcy in 2021. With the Series Bs out of the way, Garrett Motion is free to dedicate its cash flow to continued deleveraging or share buybacks. At some point in the next year or two, the conditions will be met for Garrett Motion to convert these preferreds and simplify their capital structure. If the market stubbornly refuses to value Garrett Motion shares at a reasonable price, I believe the company will pursue a sale or merger. Until then, our preferred shares will continue to accrue dividends at an attractive yield. The preferreds are worth at least $15 today, and possibly $20 or more if the company can reduce leverage and/or buy back shares and the automotive market recovers.”
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Our calculations show that Garrett Motion Inc. (NYSE:GTX) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Garrett Motion Inc. (NYSE:GTX) was in 20 hedge fund portfolios at the end of the second quarter of 2022, compared to 19 funds in the previous quarter. Garrett Motion Inc. (NYSE:GTX) delivered a 0.46% return in the past 3 months.
In April 2022, we also shared another hedge fund’s views on Garrett Motion Inc. (NYSE:GTX) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.
Disclosure: None. This article is originally published at Insider Monkey.
